Nortel Adds Value-Based Rewards

Beginning Feb. 28, Nortel intends to offer two optional components that provide deeper product pricing discounts to solution providers that maintain high levels of customer satisfaction and that are committed to building up their services infrastructure, said Christine Durham, vice president of channel marketing at the networking equipment vendor, based here.

Nortel is the latest in a string of vendors, including IBM, Cisco Systems and Citrix Systems, that have added program incentives that reward partners for providing value in the sales process instead of just meeting volume goals.

Under the new strategy, Nortel plans to use a third-party organization to measure customer satisfaction levels at accounts nominated by participating partners throughout the year, Durham said. Solution providers who meet Nortel's threshold standard will have additional discounts worked into the product pricing they receive from Nortel, she said. Durham declined to disclose the exact amount of those discounts.

Nortel also plans to reward with additional discounts Premium partners who meet a "rigorous set of guidelines" for services infrastructure, Durham said. Criteria for the reward include having a network operations center, offering 24x7 remote network monitoring services, committing to stepped-up certification and accreditation levels, and building labs stocked with demo equipment, she said.

"We wanted to make sure that those partners who have made the investment [in services] have the opportunity to compete with larger partners," Durham said.

Nortel plans to maintain its traditional volume-based discount program, Durham said. However, volume partners that choose not to participate in the value programs will see price increases from Nortel, she said. Durham declined to be more specific.

In many cases, small solution providers specializing in specific geographies or segments of Nortel's product line applauded the new program, saying they have found it difficult to compete against large resellers selling all of Nortel's products nationwide. The vendor has 1,200 North American partners.

Competition from large partners has been problematic for Patriot Technologies, a solution provider in Frederick, Md., that specializes in security products and services, said Bruce Tucker, president of company. "Nortel has interesting and compelling security solutions, but there are plenty of customers that buy more network gear than security products, and it does put us at a disadvantage when we're up against national resellers with massive discounts," he said.

Losing out on equipment sales can often cut solution providers out of services opportunities, said Kevin DiPaolo, senior vice president of Frontrunner Network Systems, a networking and communications integrator in Rochester, N.Y. "Services follow equipment, so if we don't sell the equipment, it's much harder to sell the services," he said. "[Nortel's program] gives us an even playing field and makes our services that much more attractive."

With its new incentives, Nortel is encouraging channel partners to work with converged data and voice technology, which require high levels of service and customer satisfaction to be successfully implemented, said Rick Snyder, senior vice president of NextiraOne, a global network integrator in Houston.